deca finance cluster exam vocabulary

vocabulary terms to know for the deca finance multiple choice exam and roleplays.

debtor-creditor relationship.

a debtor is someone who owes a financial obligation (debt) to a creditor. interest must be charged.

affinity fraud.

refers to investment scams that prey on members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. perpetrators of these scams are or pretend to be members of the group. these scams involve ponzi or pyramid schemes.

phishing.

the fraudulent practice of sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers.

upward communication

process of information flowing from lower levels of a hierarchy to the upper levels.

downward communication

occurs when information and messages flow down through an organization's formal chain of command or hierarchical structure. ie, messages and orders start at the upper levels of the organizational hierarchy and move down toward the bottom levels.

lateral or horizontal communication.

the exchange, imparting or sharing of information, ideas or feeling between people within a community, peer groups, departments or units of an organization who are at or about the same hierarchical level as eao for the purpose of coordinating activities, efforts, or fulfilling a common purpose or goal.

economic resources

the goods or services available to individuals and businesses used to produce valuable consumer products. include land, labor, capital, and entrepreneurship, aka factors of production.

convergence ratio.

the measure of a company's ability to meet its financial obligations. in broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders.

financial consolidation

the process of combining financial data from several departments or business entities within an organization, usually for reporting purposes.

data mining.

the practice of examining large databases in order to generate new information. (the process of automated extraction of hidden, previously unknown and potentially useful information from large databases). includes artificial neural networks, decision trees, dashboards, nearest-neighbor method).

artificial neural networks

set up in a similar way to neurons in the human brain. a digital computer is used to run a simulation on heavily interconnected mini-programs, which stand in for the neurons in the simulated neural network.

decision trees

a decision support tool that uses a tree like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. it is one way to display an algorithm.

dashboards

a user interface that, somewhat resembling an automobile's dashboard, organizes and presents information in a way that is easy to read.

nearest neighbor method

a prediction technique that is quite similar to clustering -- its essence is that in order to predict what a prediction value is in one record look for records with similar predictor values in the historical database and use the prediction value from the record that is nearest to the unclassified record.

industry forecasting.

use of historic data to determine the direction of future trends. businesses utilize this to determine how to allocate their budgets or plan for anticipated expenses for an upcoming period of time. this is typically based on the projected demand for the goods and services they offer.

operating agreement.

an agreement among limited liability company members governing the llc's business, and members' financial and managerial rights and duties.

profit-loss statement.

financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time.

cost standard.

the practice of substituting an expected cost for an actual cost in the accounting records, and then periodically recording variances showing the difference between the expected and actual costs. used to save time. ba

balanced scorecard.

a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

query.

a question, especially one addressed to an official or organization, especially in order to express one's doubts about it or to check its validity or accuracy. includes select, data definition, crosstab, passthrough.

select query.

one of the easiest to use and can be used to select and display data from either one table or a series of them depending on what is needed.

data-definition query.

does not retrieve data. instead, data-definition query uses data definition language to create, modify, or delete database objects.

crosstab query.

a transformation of rows of data to columns usually involving aggregation of data. pa

passthrough query.

used to send commands directly to an odbc database server -- you work directly with the server tables instead of having microsoft jet database engine process the data.

capital expenditures.

money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment.

random access memory (ram computer component).

a type of computer memory that can be accessed randomly. ram is the most common type of memory found in computers and other devices, such as printers. g

globalization.

the process by which businesses or other organizations develop international influence or start operating on an international scale.

bond yields.

the amount of return an investor realizes on a bond. no

nominal yield.

the interest paid divided by the face value of the bond.

current yield.

equals annual earning of the bond divided by its current market price. b

bonds.

a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. owners are debt-holders, or creditors, of the issuer.

big q.

striving for quality in all of the firm's products and processes. it

little q.

striving for quality in a limited or specific area. e

expropriation.

the action by the state or an authority of taking property from its owner for public use or benefit.

torts.

a wrongful act or an infringement of a right (other than under contract) leading to civil legal liability.

obstruction of justice.

any attempt to hinder the discovery, apprehension, conviction or punishment of anyone who has committed a crime. includes bribery, murder, intimidation, and the use of physical force against witnesses, law enforcement officers or court officials.

breach of contract.

a legal cause of action in which a binding agreement or bargained for exchange is not honored by one or more of the parties to the contract by non performance or interference with the other party's performance. s

substantiation.

to establish by proof or competent evidence.

trade.

involves the transfer of goods and\or services from one person or entity to another, often in exchange for money. a network that allows this is called a market.

contract.

a voluntary arrangement between two or more parties that is enforceable by law as a binding legal agreement contract is a branch of the law of obligations in jurisdictions of the civil law tradition.

antitrust law.

a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. p

property law.

the area of law that governs the various forms of ownership and tenancy in real property and in personal property, within the common law legal system. in the civil law system, there is a division between movable and immovable property.

tax deduction.

a reduction of income that is able to be taxed, and is commonly a result of expenses, particularly those incurred to product additional income. t

tax deferred

refers to investment earnings such as interest, dividends or capital gains that accumulate tax free until the investor takes constructive receipt of the gains. fo

format of business letter.

address, aka the return address, comes first and is placed on the left hand side if you're using full block format or right hand if you're using modified block format. directly beneath your address, put the date on which the letter was written. beneath the date, put the name and address of the person you're writing to, as it would appear on an envelope. after the address, leave a line space and write "dear..." as appropriate. follow this with a colon. the body of the letter is left-aligned and has single spacing between lines and a blank line (with no indent) before each new paragraph. the closing should be left aligned for full block format or on the right for modified block format. put several blank lines (to sign your name) after the "yours, sincerely," (if you know the person) or "yours, faithfully," (if you don't know the person), then type your name. your name and signature are left aligned for full block and right for modified block.

collection letter.

written notification of the pending amounts, meant to prod past due customers to make a payment. they are sent usually one after another, with the tone and language getting more direct with each successive letter, until at least some payment is received (going from passive aggressive to aggressive. think cardan's letters). also called dunning letters.

cause and effect of inflation.

increase in inflation causes a decrease in purchasing power.

why check credit history?

to avoid being denied credit.

mortgage company.

often just the originator of a loan; it markets itself to potential borrowers and seeks funding from one of several client financial institutions that provide the capital for the mortgage itself. c

credit union.

a nonprofit making money cooperative whose members can borrow from pooled deposits at low interest rates. i

insurance company.

pools clients' risks to make payments more affordable for the insured. insurance is a contract (and a scam), represented by a policy in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

cpa firm.

a firm that is licensed in the state in which they operate and owned, at least in part, by a certified public accountant. comprises auditors who conduct both public and private audit engagements. m

money market.

the trade in short term loans between banks and other financial institutions. tr

treasury bills.

a short dated government security yield no interest but issued at a discount on its redemption price.

herd behavior (on investors).

describes how individuals in a group can act collectively without centralized direction. fin

financial information management.

the basic objective of the financial information system is to meet the firm's financial obligations as they come due, using the minimal amount of financial resources consistent with an established margin of safety.

accrual vs. cost accounting.

the main difference is the timing of when revenue and expenses are recognized.

cost accounting.

the cash method is most used by small businesses and for personal finances. the cash method accounts for revenue only when the money is received and for expenses only when the money is paid out.

accrual.

the accrual method accounts for revenue when it is earned and expenses, goods, and services when they are incurred. the revenue is recorded even if cash has not been received or if expenses have been incurred but no cash has been paid. most common method used by businesses. busine

business activities.

business activities include any activity engaged in the primary purpose of making a profit. includes operating, investing and financing activities.

operating activities.

the first section of the cash flow statement. the functions of a business related to the provision of its offerings. these are the company's core business activities, such as manufacturing, distributing, marketing, and selling a product or service.

investing activities.

the second section of the cash flow statement. consist of buying and selling long term assets and other investments.

financing activities.

the last section of the cash flow statement. transactions with creditors or investors used to fund either company operations or expansions.

capital market.

a market for demand and supply of debt and equity capital. decentralized and made up of three parts -- the stock market, the bond market, and the money market.

financial information management.

managing data such as credit card numbers, accounting balances, or other monetary facts about an individual, business, or other organization that are used when evaluating credit, loans, or other financial activities.

financial institutions.

organizations that are public or private who act as a channel between savers and borrowers of funds. two types: depository (banks or credit unions) and non-depository (insurance companies or mutual funds).

securities.

bonds, debentures, notes, opinions, and shares.

securities and exchange commission (sec).

government agency created in 1934. sets standards for financial information about businesses that are traded on a stock exchange. has 5 commissions. appointed by the president, confirmed by the senate. 5 year term.

transmittal letter.

a letter that lets the recipient know exactly what should be contained in a package and if the recipient needs to take any action.

claim letter.

requests a solution to a problem.

acknowledgement letter.

acknowledges the receipt of business papers.

request letter.

asks for information.

matrix organizational structure.

a combination of the functional structure and the divisional structure. includes traditional departments, but is also broken down by division. it is a relatively new organizational structure. de

deposit-taking financial institutions.

accepts funds from customers and pay interest on the funds. eg, credit unions, savings and loan associations, commercial banks.

commodities investors.

invests their funds in goods such as grains, livestock, raw materials, etc.

stock table.

typically includes the 52 week high and low, the stock symbol, the estimated dividend per share, the yield percentage\rate of return, the volume for the day, the closing price for the day, the net change and the pe ratio.

vertical analysis.

calculates each individual item on a financial statement as a percentage of the total to develop common size financial statements that allow comparisons of performance across several years for a single company or across several different companies.

horizontal analysis.

analyzes dollar amounts on financial statements for a single company across several years.

consumer marketing.

emphasis on promotion and advertising.

business marketing.

emphasis on personal selling.

underwriter.

responsible for calculating the risk of loss, establishing premium rates, and designing policies to cover risk. very important to the insurance industry.

convenience product.

a type of good that is purchased often by a consumer without involving much exertion or consideration.

shopping product.

a higher end product occasionally bought by consumers. usually compared to other products for appropriateness, quality, cost, and features before purchase occurs. consumers tend to take more time when purchasing a shopping good produced by a business, and they might even travel to buy such goods.

capital product.

tangible assets such as buildings, machinery, equipment, vehicles and tools that an organization uses to produce goods or services in order to produce consumer goods and goods for other businesses.

specialty product.

a product that certain consumers will actively seek to purchase bco unique characteristics or loyalty to a specific brand. consumers who seek specialty products k what they want and will spend the time and effort to get it.

joint venture.

a commercial enterprise undertaken by two or more parties that otherwise retain their distinct identities.

wholly owned subsidiary.

a company that is completely owned by another company. the company that owns the subsidiary is called the parent company or holding company. the parent company will hold all of the subsidiary's common stock.

franchise.

an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, eg, providing a broadcasting service or acting as an agent for a company's products.

independent trade intermediary.

middle men, third parties, proxies.

procedural law.

comprises the rules by which a court hears and determines what happens in civil, lawsuit, criminal or administrative proceedings.

statutory law.

define written laws, usually enacted by a legislative body. they vary from regulatory or administrative laws that are passed by executive agencies, and common law, or the law created by prior court decisions. a bill is proposed in the legislature and voted upon.

commercial law.

aka business law or corporate law, is the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales. it is often considered to be a branch of civil law and deals with issues of both private law and public law. a

administrative law.

the body of law that regulates the operation and procedures of government agencies.

what is the best solution for unemployment?

cut wages.

quality circle.

a group of employees that meets regularly to consider ways of resolving problems and improving production in their organization.

data normalization.

simply normalization, is the process of organizing the columns (attributes) and tables (relations) of a relation database to reduce data redundancy and improve data integrity.

open credit plan.

a pre-approved loan between a financial institution and borrower that may used repeatedly up to a certain limit and can subsequently be paid back prior to payments coming due. also referred to as a line of credit or revolving line of credit.

revolving credit plan.

a line of credit where the customer pays a commitment fee and is them allowed to use the funds when they are needed. it is usually used for operating purposes and can fluctuate each month depending on the customer's current cash flow needs.

managerial accounting.

provides information to people within an organization while financial accounting is mainly for those outside it, such as shareholders. used primarily by those inside a company or organization.

financial accounting.

required by law (while managerial accounting is not). specific standards and formats may be required for statutory accounts such as in the ias international accounting standard within europe. financial accounting covers the entire organization while management accounting may be concerned with particular products or cost centers. used primarily by those outside of a company or organization.